As a CERTIFIED FINANCIAL PLANNERTM and a believer in Christ, this is what I hope is said of me. I admit that I struggle balancing both Christian beliefs and modern-day financial planning strategies. Take for example the balance between growth and greed or savings verses hoarding. The challenges are real.
One area that is often overlooked is Long-Term Care. In my 26 years in the financial services field, I have seen many changes in Long-Term Care products. In reality everyone has a Long-Term Care plan. The problem is that it may not be a very good one.
I sold my first Long-Term Care plan in 1995 to a professor and his wife from NC State. It was a modest plan that covered both of them for 3 years or one for 6 years. At the time it was the only type of Long-Term Care policy available, similar to your homeowners policies today.
Shortly after purchasing the policy the wife died. This was hard and had the professor questioning if he should keep the policy in place since his wife would not benefit from the plan. After discussing if he wanted his kids to take care of him in his old age, he decided to keep the policy. I really did not give it much thought until 15 years later I received a phone call from one of his kids letting me know that he had passed and to thank me for setting him up with his Long-Term Care plan. He was able to have great care because of it.
Seldom do I get calls like this and it really made me think about the value that this plan provided. Fast forward to this year and my father. He had his second stroke in 6 years, but unlike the first he would not recover from this one. My parents many years ago had taken out a home health care plan that provided a minimal benefit for home health care.
This small plan was what allowed my dad to live his last days in the house where he lived with my mom and occasionally my sister and me. Home health care is expensive, but with the policy my mom was able to use the benefits to cover a majority of the cost of care and not have to dip into the savings she would rely on for her wellbeing for the future.
As a CERTIFIED FINANCIAL PLANNERTM I am required to be a fiduciary, which I think of as a steward. My views on Long-Term care have changed and as I work with more clients in retirement, it has become my passion. The statistics for having a Long-Term Care need are staggering. According to a 2018 Morningstar article 52% of people turning 65 will need some type of long-term care service in their lifetime. 47% of men age 65 will need it and 58% of women. This is roughly equivalent to flipping a coin.
The average stay is 2.5 years for women and 1.5 years for men. 14% of people will need long-term care longer than 5 years. Now consider the cost. The median annual nursing home cost is $85,775 a year. This begs the question are you willing to flip a coin and bet on between $128,662 to an average cost of $341,840 should you have dementia?
The good news is that you don’t have to. Today there are many affordable ways to cover this expense. Yes, you can do the traditional way and pay for it as you need it, but that just gives money to the nursing home instead of your family. You can use a life insurance policy with a long-term care rider on it. There are asset based long-term plans and annuity based long-term plans. With my experience I can help you find the best option to meet your needs.
Finally you need to know that Medicare will not cover these costs and it is only when Medicaid kicks in that they will pay for some of the long-term care, but to get to this level you have to exhaust all your resources except your home and even then after your spouse dies they will come get that.
I began with the scripture from Matthew 25:23 “Well done my good and faithful servant” and I want you to be the best steward of your resources by understanding your options for Long-Term Care. Come by my office or attend one of my seminars to learn more.